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Gogo CEO: 'We're in the Very Early Innings' (Update 1)

Written by: Chris Ciaccia11/11/13 - 11:18 AM EST

Tickers in this article:
GOGO

Updated from 8:08 a.m. EST

NEW YORK ( TheStreet) -- Gogo shares surged 25.8% to $23.59 in trading on Monday after the in-flight Internet company posted results that blew past Wall Street expectations.

Gogo posted a third-quarter loss of 22 cents a share as revenue rose 48% from last year to $85.4 million. Service revenue ticked up 52%, led by a 24% increase in the number of airplanes using Gogo's services, and a 21% increase in the average revenue per aircraft (ARPA).

Adjusted EBITDA increased to $2 million for the quarter, up from $600,000 in the year-ago quarter, led by a $6 million increase in the Business Aviation segment, and a $2.6 million decrease in the CA-NA segment loss, which was partially offset by a $7.2 million increase in CA-ROW segment loss.

Analysts surveyed by Thomson Reuters expected the company to lose 31 cents a share on revenue of $76.8 million.

"We're still in the very early innings of this industry," CEO Michael Small said in a phone interview with TheStreet. "It's transformative to aviation, a lot of what we're doing. We expect to continue to see continued growth in ARPA for years and years and years."

Gogo is raising the rest of its 2013 guidance. It now expects to generate $325 million in revenue, up from a previous view of $315 million, led by an increase in both CA-NA and Business Aviation segments.

It also now expects adjusted EBITDA to be $10 million, up from zero, due to higher revenue and certain capital expenditures being push to 2014. It now expects capital expenditures to be below $115 million. During the interview, Small said the reason behind the lower capital expenditure number is the company is building fewer cell cites this year, and there were some regulatory delays for the company's international expansion into next year.

Last week, Gogo unveiled its new Text & Talk service, giving users the ability to text and talk on an airplane using a new app the company created. Small said that while the company's "bread and butter" is growing the connectivity service, he views "Text & Talk as a meaningful increment to that." Pricing for the app has not been made public, but the company noted it is looking at a variety of different pricing options to make it attractive to users.

Small also touched on a new service that could be positioned as a competitor to Netflix and HBO GO . Gogovision, the company's answer to Netflix and HBO GO, is now installed on well over 1,000 aircraft, despite the service just being rolled out. Over 500 aircraft are active, and Small said he expects there will be over 1,500 aircraft active in the next few months.